Addressing Basic Needs through Financial Empowerment

“I don’t have the bandwidth to talk about identity theft.” – Re-entry case manager

 “Front-line staff won’t take on a formerly incarcerated person’s debt; that’s outside their job description.” – program manager

 “Job developers can’t be expected to have the skills to take on jobseekers’ banking relationships.” – executive director

We often hear service providers suggest that people in crisis can’t afford to focus on their personal finances—that building financial security only makes sense after a person’s basic survival needs have been met. Many community-based organizations also say that financial empowerment is beyond the scope of what they can or should do.

These assumptions are not only outdated, they’re counterproductive.

Nearly 25 years ago, Dr. Michael Sherraden proved wrong those who doubted that poor people could save. His book Assets and the Poor, in which he called for Individual Development Accounts (IDAs)—matched savings accounts that would help low-income families build assets—went on to become a seminal body of work. It gave birth to a field and a new way of thinking about how to fight poverty. It also reminded us that a strengths-based approach to human and social services—one focusing on future outcomes and an individual’s self-determination and strengths—is not only empowering, it also produces results.

The Financial Clinic’s “New Ground Initiative” builds on Dr. Sherraden’s work by taking a broader look at how we think about financial empowerment. For many people struggling on the brink, financial security is about much more than home ownership or retirement planning; it requires tackling complicated challenges not often viewed as “financial”—such as barriers to rejoining one’s community after incarceration.

The New Ground Initiative seeks to increase the capacity of re‐entry programs—which serve individuals returning to their communities after incarceration—to address barriers to financial security. Formerly incarcerated individuals face many significant obstacles to economic security—such as barriers to employment, housing, public assistance, and education and training. Many of these barriers are the result of “collateral consequences”—penalties embedded in public policy that prevent people with criminal records from accessing basics such as a job, an apartment, or vital public assistance programs such as food stamps.

For many people struggling on the brink, financial security requires tackling complicated challenges not often viewed as “financial.”

The New Ground Initiative trains re-entry service providers on how to tackle these and other financial obstacles. These efforts have created powerful and inspiring achievements in the areas of employment, housing, and education.

For example, after returning home from incarceration, John (name changed) was worried about starting work and opening a bank account; he was afraid that his child support arrears would cause his new wages to be garnished. He is far from alone—unaffordable child support obligations are a major driver of post-incarceration debt. In fact, many formerly incarcerated individuals are released only to find that their child support debts have accumulated into the tens of thousands of dollars while they were behind bars. However, because of the training he did with New Ground, a job developer was able to help John modify his child support order to an affordable amount and then helped him open a bank account. The job developer also helped John set up direct deposit on his first day of work.

New Ground has also enabled re-entry programs to help their clients’ access housing opportunities. For example, Sarah was having trouble securing an apartment after returning home from incarceration. She had her credit report pulled by a re-entry service provider and they found that she was a victim of identity theft. The program referred Sarah to a financial coach, who was able to support her in getting the fraudulent debt removed, which in turn enabled her to rent an apartment.

Another re-entry program—focused on helping people achieve their educational goals after exiting jail or prison—reported that training with New Ground was fundamental to the program’s ability to help participants negotiate old student loan debt. Lowering monthly student loan payments allowed these individuals to make ends meet and return to school.

These successes confirm the Clinic’s model that strategies to build financial security in turn reduce barriers to basic needs. They also demonstrate that projects like the New Ground Initiative can help programs that serve justice-involved individuals achieve even better results.

You can stay informed about the Financial Clinic and help spread the word about its services by signing up here.




Free college plan will help, not hurt, low-income students

President Obama recently introduced a proposal to make two years of community college free nationwide. This is a bold effort that might not have been necessary twenty years ago, but today it is sorely needed. There is a popular perception that community college is already free or nearly free, especially for students from low-income households, and that the real challenges facing students have more to do with academic under-preparation or informational barriers.

If only this were true.

The average out of pocket cost facing community college students from low-income families ranges from $8,000-$11,000 per year. That is after all grant aid is taken into account, and it represents the amount that students must borrow and earn in order to make college possible. The situation facing moderate-income families is not much better—and they are often in a more difficult situation since they have little disposable income and yet cannot access the federal Pell Grant.

Thirty years ago, high schools were focused on helping more students envision college as part of their future. Two decades ago they began really focusing on academic preparation for college. But today, ambitious, academically prepared high school graduates are attending college and leaving without degrees because they cannot afford to be there. Among the academically prepared, more than one in five high school graduates from low-income families forgoes college entirely, and about 30 percent who start at a two-year college never complete any degree. These non-completion rates signal talent loss, and things have gotten worse over the last decade.

Among the academically prepared, more than one in five high school graduates from low-income families forgoes college entirely.

As an education scholar and researcher who has published extensively on the topic of college affordability, I’m troubled by the response of many progressives and scholars who criticize President Obama’s free community college proposal for not being “narrowly targeted.” The implication is that only a plan that exclusively serves low-income students, and no one else, can meet their needs. This is a false narrative, capable of sowing confusion and killing the prospects of legislation that could do real good.

The truth is that low-income students stand to benefit from free community college in real and measurable ways that will increase their access, boost their persistence, and raise their graduation rates. Since the president’s plan is a “first-dollar” plan, low-income students would receive the greatest subsidies. Students would not have to give up their Pell grants; instead, because tuition would be free, Pell grant funding could be used to meet costs other than tuition. Thus, I predict that low-income and moderate-income students would realize greater gains than their more affluent classmates. The clear and inclusive signal created by “free community college” coupled with the progressive distribution of monetary benefits makes this effective “targeting within universalism.”

Rigorous studies have shown that reducing the cost of community college by even $1,000 a year results in substantial increases across the board. More low-income students enroll directly from high school. More low-income students enroll who would not otherwise have enrolled at all. More low-income students transfer to four-year colleges. And the students who would not have enrolled—except for the fact that community college became more affordable—are more than 20 percent more likely to earn a bachelor’s degree within eight years of high school graduation. All that for a $1,000 discount? Imagine what those numbers would be if the first two years of community college—or any college, as Senator Bernie Sanders recently proposed—were made free.

To help advance a greater understanding of the value and mechanics of making the first two years of college free, I’ve written a response to questions many people have about the president’s proposal. In addition, I’ll be participating in a public discussion with economist Steven Durlauf on the topic that will be held March 12 on the campus of the University of Wisconsin-Madison and televised in the state and online via Wisconsin Eye. Our national dialogue on the merits of making postsecondary education available to everyone—and affordable—is, finally, beginning.




A Glimmer of Positive News: Wages Rose for Bottom 10 Percent (Unlike for Everybody Else)

In a report released this week, I found that 2014 continued a 35-year trend of broad-based wage stagnation. Real, inflation-adjusted hourly wages stagnated or fell across the board, with one notable, glimmer of positive news: Unlike the rest of the wage distribution, wages actually increased at the 10th percentile between 2013 and 2014.

The figure below shows changes in real hourly wages throughout the wage distribution between 2013 and 2014. What is particularly striking is that almost every decile and the 95th percentile experienced real wage declines from 2013 to 2014, with two exceptions. First, there was a very small increase at the 40th percentile wage, up 3 cents, or 0.3 percent. But a more economically significant increase occurred at the 10th percentile where hourly wages were up 11 cents, or 1.3 percent.

So, why did wages at the bottom tick up when they fell for nearly everyone else? What is so special about that wage that sits below 90 percent and above 10 percent of workers (i.e., is not generally earned by particularly privileged workers)?

The answer is simple: we still have some labor standards that provide wage protections. More specifically, 18 states increased their minimum wage in 2014 (either through legislation or through automatic inflation adjustments). The states with minimum wage increases in 2014, displayed in green below, represent 57 percent of the workforce.

When we compare states with and without a minimum wage increase, we find clear evidence that the minimum wage is the reason people at the 10th percentile wage didn’t see the negative trends found elsewhere in the workforce. The figure below compares the wages in these states with those in states without minimum wage increases. Wages at the 10th percentile rose by 1.6% in states with minimum wage increases, while in states without such an increase, they pretty much stagnated—increasing by a scant 0.3%.

The great news in this story is that policy can actually affect the labor market. And, it is imperative that we use all the policy levers at our disposal to help rejuvenate the economy, create jobs, and build stronger wage and income growth for the 99%. 



REACH: Stories of Black Men and the Communities that Shaped Them

After the killing of Michael Brown last summer, the nation’s attention turned towards Ferguson, Missouri – a small town with a history mirroring that of many communities across the country. Over a period of just a few decades, white residents largely disappeared from the town, concentrated poverty became rampant, and the criminal justice system has disproportionately targeted black residents. In the months after the shooting, the town became a central focus in the media’s narrative, revealing how decades of disinvestment and a history of racially biased policies enabled this tragedy. In short, where you live matters.

It is within this context that the new book, REACH: 40 Black Men Speak on Living, Leading, and Succeeding, must be understood.

Co-edited by former NAACP President Ben Jealous, a Senior Fellow at the Center for American Progress, the book celebrates black men through the personal essays of entrepreneurs, artists, teachers, philanthropists, and activists.  By chronicling each man’s path to success, the first person narratives in Reach also serves as a counterpoint to the negative images of black men that saturate the media.

One of the more subtle yet significant aspects of the book is how it reveals the critical role that communities play in the black experience. Contributors address everything from Jim Crow laws and the Great Migration to life in inner cities and current concerns over gentrification.

Derrick Johnson, State President of the Mississippi NAACP, captures some of the most seminal moments in the rise and fall of black communities when he writes: “The previous generation of my family had migrated to Detroit from the South in order to get good jobs in the auto industry, but after Reaganomics and the decline of the unions, those jobs went away.” He continues, “By the early 1980s, when I was coming up, it was drugs and poverty all around.”

Every contributor shares his unique story, and stitched together, they form a tapestry of the black experience in towns and cities across the country.

Success is determined by your zip code, by your race and ethnicity, and by your parents’ wealth status.

More importantly, the book reveals how the community you grow up in shapes your long-term life prospects. For example, Dr. Emmett D. Carson, CEO of the Silicon Valley Community Foundation, recalls an incident when a young man was shot outside of his Chicago home and his father came to the man’s aid. Shortly afterward, Carson and his family moved a short distance away for better opportunities.

“I had moved thirty blocks, and all of a sudden, everything was in front of me – I was told every opportunity could be mine if I worked for it,” he writes. “And yet I had friends and family in the old neighborhood who were not going to be exposed to the same opportunities.” He continues, “We don’t have a society where we can say that success is random. Success is determined by your zip code, by your race and ethnicity, and by your parents’ wealth status.”

Carson’s words summarize the consequences of living in concentrated poverty, and how the opportunity to live in a better area can change the trajectory of one’s life. In fact, research shows that a person’s zip code has more to do with their life expectancy than their genetic code. For instance, poverty has been shown to genetically age children, and exposure to neighborhood violence impairs cognitive ability. Further, living in high poverty communities often means having little or no access to services that many people take for granted. Shaka Senghor, Director of the Atonement Project at the University of Michigan, highlights this at the beginning of his powerful essay. After becoming a victim of gun violence, he explains, “I was bleeding profusely waiting for the ambulance as long as I could – you know, in the ‘hood, we have no expectations of the ambulance coming.” He goes on, “I was exposed to probably every horrific thing you can imagine in that environment.”

Given that Reach takes on the heavy burden of combating the negative images of black men that flood America’s collective conscious, it would be tempting to select stories of individuals with spotless backgrounds. Instead, Jealous and co-editor Trabian Shorters rightly include the stories of men who were tangled up in crime and violence, highlighting how their communities became fertile grounds for such destruction. As Yusef Shakur, CEO of YBS Consulting, writes of his own turn down the wrong path: “When we think of ‘undeveloped’ places, we tend to think of third world countries. But here in Detroit we have third world neighborhoods. These communities don’t have the nurturing influence of families, of strong businesses or strong churches. The mentality of the streets is filling those voids.”

Inclusion of these stories is significant as black men are disproportionately impacted by the criminal justice system. Due to structural racism and hyper-criminalization, black men are incarcerated at a rate six times higher than that of white men, and 49 percent of black men have been arrested by age 23. Not only is it important for young black men who may have criminal records to see that the paths to success are often winding, it is also critical for the public to understand the humanity of people who have borne the weight of handcuffs.

It would be easy to point to these stories as evidence that it is possible to “pull yourself up from your bootstraps,” but that interpretation entirely misses the important lesson of the book. We shouldn’t be satisfied with people succeeding despite the conditions of their communities; we want people to succeed because of them.

Reach serves as a reminder that there are children of color living in communities across the country who are still waiting on this nation’s promise of opportunity. Leaders must work together to right the wrongs of past policies that created these communities, and ensure that, as President Obama stated in announcing the Promise Zones Initiative, “A child’s course in life should be determined not by the zip code she’s born in, but by the strength of her work ethic and the scope of her dreams.”




‘Barely Enough to Survive’: Exposing (and Closing) the Race and Gender Gaps in Elder Poverty

The year 2015 marks the 50th anniversary of Medicare’s establishment and the signing of the first Older Americans Act. In 1966, President Johnson called for substantial increases in Social Security benefits, which were approved by Congress in 1967. In large part due to these measures poverty among the elderly is much lower today than it was then. In 1966, nearly 29 percent of elderly Americans had incomes below the poverty line, compared to about one in ten (9.5 percent) today.

Still, one in ten is far too high. Moreover, despite the passage of landmark civil rights and equal pay legislation in the 1960s, substantial gender, racial and ethnic gaps remain among older Americans living below the poverty line. As the accompanying graphic shows, older adult women are generally at a considerably greater risk of living in poverty than elderly men. Elder white, non-Latino women are nearly twice as likely to live in poverty as white men.

Click on the chart to see an expanded version

Click on the chart to see an expanded version

Similarly, older adult blacks, Latinos, Asians, and Native Americans all have much higher poverty rates than white, non-Hispanic elders. The gap is greatest for older Latinos, who are nearly three times as likely to live in poverty as older white, non-Latinos.

There are also significant gaps by race and ethnicity in retirement savings and wealth. Gaps in wealthy by race and ethnicity are much larger than the income gaps. Researchers at the Urban Institute have documented that among today’s seniors, the average family wealthy wealth for white, non-Hispanics is roughly ten times that of blacks and Latinos.

Why do these gaps exist? To a large extent, they reflect policy-driven disparities in the labor market experiences and living standards of elders during their working lives. Compared to white workers, Hispanic and black workers are much more likely to earn poverty-level wages and lack health insurance, retirement and other employer benefits. Even today, women working full-time make only 78 cents for every dollar men earn working full-time earn. While this gender wage narrowed considerably in the 1980s and 1990s, it has improved little over the past decade. By and large, gender and racial gaps in wages are not explained by differences in education, for both African Americans and women, the gaps exist among those with similar levels of education

The case of Evelyn Coke, who sued to reverse a loophole in federal labor regulations that exempted home-care agencies from having to pay overtime, provides a stark example of policy-driven disparities can have a disproportionate effect on women and people of color. Coke, a mother of five who died recently at age 74, worked as a home health care aide for decades after immigrating to the United States from Jamaica. Despite regularly working more than 40 hours per week, Coke’s wages remained very low, about $7 an hour, and she received neither overtime pay nor health benefits.

Like Coke, home care workers—and many other workers in care-related jobs that pay low wages and provided limited or no benefits—are disproportionately women and people of color. Last year the Department of Labor extended minimum wage and overtime protections to home care workers who had previously been excluded, but the home care industry has mounted a federal court challenge to the fair pay requirement.

Beyond modest steps like this, broader disparities in pay and benefits mostly remain unaddressed. These disparities mean women and people of color have less money, if any, socked away at retirement. And, because retirees’ initial Social Security benefit levels are set based on their average earnings, there are disparities in the benefits they receive. For example, both women and people of color are overrepresented among the 1 in 5 Social Security beneficiaries—who receive sub-poverty benefits when they retire.

In addition to wage gaps, time spent caring for children or other family members contribute to these gaps. Caregivers don’t receive any credit from Social Security for the unpaid caregiving they provide, making them more likely to not be eligible at all or have lower benefits. As Sara Moore, an 80-year Chicagoan provided years of care to a disabled father and other family members put it, “I put my family first, but all my years of caregiving amounted to zero wages and zero contributions toward Social Security. [Now] I receive less than $1,000 a month in Social Security benefits which is barely enough for me to survive.”

Greater longevity also increases women’s poverty risk because health-related expenses increase over time, and the likelihood of losing one’s partner increases. As a consequence, in 2013, there were more women age 75 and up living in poverty (nearly 1.5 million) than there were elderly men of any age below the poverty line.

So what can we do to close these gaps? First, we need to boost wages and benefits for poorly compensated workers, including by increasing the minimum wage and equal pay for women. Higher, fairer wages would mean a better retirement for today’s poorly compensated workers. Second, Social Security should be strengthened in ways that improve coverage and benefit adequacy for workers who are poorly compensated, including by increasing the minimum benefit and providing at least some credit for unpaid care work

Finally, we need to modernize and improve means-tested programs that supplement Social Security (or provide the only income) for elderly people living in poverty, including Supplemental Security Income, the Supplemental Nutritional Assistance Program and housing assistance.

In particular, federal policymakers need to reform Supplemental Security’s woefully outdated rules that strictly limit the amount of income and assets that seniors receiving benefits can have. For example, in SSI, a very low-income senior living alone is ineligible for help if they have more than $2,000 in assets, an amount that has barely budged since the SSI was created in the early 1970s.

In short, addressing the gender and racial gaps in elderly poverty requires concerted action on multiple fronts. This may seem like a lot, but when you consider the consequences—millions of elderly Americans who have little to show for years of hard work—it’s the least we can do.

Originally published in Aging Today, January –February 2015. Copyright © 2015 American Society on Aging; all rights reserved. This article may not be duplicated, reprinted or distributed in any form without written permission from the publisher: American Society on Aging, 575 Market St., Suite 2100, San Francisco, CA 94105-2869; e-mail: For information about ASA’s publications visit For information about ASA membership visit